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Eq: Total Market

(New York)

While a lot of sentiment is starting to look more positive, Deutsche Bank has just come out with the exact opposite opinion. The bank has gone on the record warning that a recession will arrive very shortly, and that stock prices should be at least 13% lower than they are. The bank’s chief global strategist said, “We are cautious on stocks. We would argue you want to be defensively positioned [and] we would argue that the U.S. equity market has run way, way ahead of growth”. He continued “Every time payrolls growth has gone below 1%, the U.S. has ended up in recession. We would argue the U.S. economy is dangerously close to...tipping into recession”. US jobs growth is currently at 1.3% and slowing.


FINSUM: This is a really bearish outlook from an investment bank, which tend to trend towards over-bullishness. We question the valuation argument, but this is certainly a view worth noting.

(New York)

Most of this summer was dominated by the dual fears of a trade war and a recession. A weakening of underlying economic data backed up the view that we may be headed for a recession, and the long yield curve inversion only heightened those fears. However, new economic data is providing a pretty strong rebuttal to those ideas. The last four economic releases, including home sales, jobless claims and beyond, have all come back more strongly than forecast.


FINSUM: The economy never looked that bad, as it was mostly the yield curve and trade war that pushed fears of a downturn. Accordingly, we don’t think these recent data releases will have much of an effect one way or the other.

(New York)

With the Fed coming in less dovish than expected this week, there is suddenly much more anxiety in the market. Without a clear direction on rates, and with lingering worries about the economy, the outlook for stocks and bonds is not clear. And as we all know, markets hate uncertainty. Accordingly, the search for the best recession-proof stocks continues, and we have a new proposal today: fast food stocks. As consumer spending falls in a recession, bargain-providing companies, like fast food, often do well. The sector also provides healthy dividends. Take a look at the usual suspects: McDonalds, Wendy’s, and Chipotle, and some you may not have thought of, like Cracker Barrel and Restaurant Brands International.


FINSUM: The “Dollar menu” suddenly becomes very attractive to the American consumer when times start getting tough. These stocks seem a good bet, especially because they have solid dividends, which should provide some protection in case a downturn doesn’t happen.

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